Correlation Between Knight Therapeutics and CHEVRON CDR
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics and CHEVRON CDR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Knight Therapeutics and CHEVRON CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and CHEVRON CDR, you can compare the effects of market volatilities on Knight Therapeutics and CHEVRON CDR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Knight Therapeutics with a short position of CHEVRON CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and CHEVRON CDR.
Diversification Opportunities for Knight Therapeutics and CHEVRON CDR
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Knight and CHEVRON is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR and Knight Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Knight Therapeutics are associated (or correlated) with CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and CHEVRON CDR go up and down completely randomly.
Pair Corralation between Knight Therapeutics and CHEVRON CDR
Assuming the 90 days trading horizon Knight Therapeutics is expected to generate 32.92 times less return on investment than CHEVRON CDR. In addition to that, Knight Therapeutics is 1.36 times more volatile than CHEVRON CDR. It trades about 0.0 of its total potential returns per unit of risk. CHEVRON CDR is currently generating about 0.03 per unit of volatility. If you would invest 1,880 in CHEVRON CDR on September 14, 2024 and sell it today you would earn a total of 187.00 from holding CHEVRON CDR or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Therapeutics vs. CHEVRON CDR
Performance |
| Timeline |
| Knight Therapeutics |
| CHEVRON CDR |
Knight Therapeutics and CHEVRON CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and CHEVRON CDR
The main advantage of trading using opposite Knight Therapeutics and CHEVRON CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics position performs unexpectedly, CHEVRON CDR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHEVRON CDR will offset losses from the drop in CHEVRON CDR's long position.| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
| CHEVRON CDR vs. Canadian Natural Resources | CHEVRON CDR vs. Suncor Energy | CHEVRON CDR vs. MEG Energy Corp | CHEVRON CDR vs. Baytex Energy Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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